U-46 contract's CPI deal not 'excellent'

To the editor: Regarding the Oct. 7 editorial, "U-46 teachers should say 'yes' to good deal."

Among others, one reason among others why U-46 teachers might not see the proposed contract as "excellent" is the way the cost of living clause has been rewritten.

The purpose of a cost of living clause is to protect against future, unanticipated accelerations in inflation by tying raises to the Consumer Price Index .

The 2004-07 contract set limits for the adjustment of 1 to 4 percent. The proposed agreement replaces the 1 to 4 percent range with a range of 1.5 to 2.8 percent.

CPI inflation during 2006 was measured at 2.5 percent. That cost of living number is built into the proposed salaries for 2007-08. But for the following years, teachers are only protected against the next .3 percentage point of inflation.

If Iran, Venezuela, China's insatiable demand or missteps by the Federal Reserve were to push inflation any higher than that, teachers get no further raise to make up for it. However, if inflation were to decelerate from the current 2.5 percent by as much as a full percentage point, teachers' nominal raises would follow suit, downward.

The 1.5 to 2.8 range is an asymmetrical ratchet. If inflation falls to around 1.5 percent, the raise shrinks, too. If inflation rises any above 2.8 percent, the raise fails to rise to keep up with it.

But it gets worse again, because inflation has already accelerated beyond the new, narrow 1.5 to 2.8 percent range.

For the raise that will arrive in September 2008, two-thirds of 2007's inflation has already been measured by the monthly CPI. The Bureau of Labor Statistics reports inflation has grown by a seasonally adjusted annual rate of 3.7 percent during the January -August period.

If that pattern holds for four more months, the CPI adjustment would be .9 percent behind actual inflation, leaving teachers exactly .1 percent ahead in real, inflation-adjusted terms in year two, not counting the step.

The same could just as easily happen again in the third year of the contract. To a lot of people, that seems less than excellent.

Steven Lauridsen

Geneva